Prime could double by end fo 2015.

All the more reason to take the 5 year fixed rate. Here is some fuel for the fire of fixed rates- which have never been this low! Below you can read the boring data we digest daily to give you the best un-biased opinion on your mortgage.

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Mark Herman, Calgary Alberta Mortgage Broker.

OECD calls for Bank of Canada rate to more than double to 2.25% by end of 2015

Gordon Isfeld | 19/11/13 7:11 AM ET

Most economists believe the Bank of Canada Governor Stephen Poloz and the central bank won’t budge off 1% until the first quarter of 2015, and perhaps even later.

Canadian Press: Most economists believe the Bank of Canada Governor Stephen Poloz and the central bank won’t budge off 1% until the first quarter of 2015, and perhaps even later.

OTTAWA — Just last month, the Bank of Canada dropped a mini-bombshell by adopting a neutral position on interest rates, after long insisting that any eventual move would be up.

That left open the real possibility the central bank may, instead, lower borrowing costs — at least until the struggling economy regains its momentum.

Textbook economics would say that deflation should have already arrived at our doorstep.

Now, the global think-tank that helps guide countries along a growth path says Canada’s central bank may actually resume its course for higher rates — beginning as early as next year — as that economic momentum returns and inflation starts to pick up speed.

“With spare capacity narrowing by the end of 2015, monetary policy tightening may need to begin by late 2014 to avoid a build-up of inflationary pressures,” the Organization for Economic Cooperation and Development said Tuesday.

The first move above the bank’s current 1% lending level — where it has been since September 2010 — will likely come in the fourth quarter of 2014, the Paris-based organization said in the report, and continue rising to 2.25% by the end of 2015.

Many economists have been expecting the first move, if it is up, to come in the first quarter of 2015.

“The pause in the economic recovery since early 2012 has continued this year,” the OECD said its economic outlook for Canada, part of a larger global report.

“Exports have been weaker than expected, possibly reflecting shifts in trade linkages and on-going competitiveness challenges. This, together with declining corporate profits, has depressed business investment.”



The OECD said this “suggests that investment growth will remain low in the near term, with firms using existing capacity more intensively.”

But exports and business investment should begin turning around through 2014 and 2015, leading to growth of 2.3% next year and 2.6% a year later, it said. In 2012, the Canadian economy edged ahead by 1.7% and the organization is forecasting the same pace this year.

“Projected growth should be enough to absorb the small degree of remaining excess capacity by end-2015, and the inflation rate should increase to near the [Bank of Canada’s] 2% target rate.”

The OECD, which has 34 member nations with both advanced and emerging economies, is predicting the world economy will expand by 2.7% this year, followed by 3.6% growth in2014.

The United States, which will remain Canada’s biggest trading partner for the foreseeable future despite free-trade deals in other regions, should grow by 1.7% this year and ramp up 2.9% in 2014.

The eurozone has managed two quarters of modest growth so far this year, after emerging from a long recession. But the OECD predicts another contraction — of 0.4% — this year, before returning to growth of 1% in 2014.

“The main risks to the projections are ongoing uncertainty about the U.S. economy and the potential for renewed tensions in sovereign-debt markets and the financial sector in the euro area,” the OECD said.

“Both factors could reduce exports and tighten financial conditions, reducing economic growth.”

The report also warned that a “disorderly correction” in Canada’s real estate market and the impact on highly indebted households “would depress consumption and residential construction and, in an extreme case, could threaten financial stability.”

That is a concern shared by the Finance Department and Bank of Canada. Both have cautioned consumers not to binge on the current cheap-credit environment. The concern is that households could be caught in a spiral of rising interest payments and shrinking equity in their homes if the market turns cold.

Last week, Finance Minister Jim Flaherty said he was prepared to tighten lending rules on home purchases — as he has four times in four years — if too many Canadian are seen getting in over their heads with mortgage debt.

Meanwhile, on the same day the central bank surprised analysts by dropping its rate-increase bias, governor Stephen Poloz and his policy team downgraded their outlook for the economy.

In its quarterly Monetary Policy Report, released on Oct. 23, the bank said Canada’s economy will likely grow by 1.6% this year, down from its July outlook of 1.8%. For 2014, the estimate was cut to 2.3% from 2.7%, while the forecast for 2015 is now 2.6%, down from 2.7%